|Regulatory Framework Name||Loi Denormandie|
|Regulatory Framework Description||A French scheme, known colloquially as the Loi Denormandie, provides tax incentives in order to help investors to renovate housing in over 220 designated urban centres in France, in return for agreeing to rent the newly renovated dwelling to a reserved group of low-income tenants. This provides shared benefits for the purchaser and the tenant, who will be able to rent a higher-quality and less-costly home at an affordable price.|
From the investor side, housing costs of up to a maximum of either €300,000 or €5,500 per m² are eligible for the scheme and the renovation costs must represent at least 25% of the overall total investment. For example, if the cost of acquisition and renovations was €450,000, only the first €300,000 are taken into consideration for the purposes of calculating the tax benefit. At the same time, if an investor renovates more than one property, the €300,000 ‘cap’ applies to the ‘portfolio’ as a whole, effectively eliminating the incentive to purchase multiple homes under the scheme.
There are also clearly defined renovation targets. For example, the renovation works must improve the energy performance of the dwelling by at least 20% for apartments and 30% for houses, attaining a minimum energy certificate of E. In addition, only homes located in defined high-demand and regeneration areas are eligible, whilst renovations must be completed no later than the end of the second year after the original purchase.
The tax reduction received by the owner is based on the length of time that you allow the property to be rented to the low-income tenant. A minimum lease is six years, giving a tax reduction equivalent to 12% of the allowable cost, while the longest possible lease is 12 years, providing a 21% tax benefit. Thus, a purchase and renovation cost of €300,000 could provide a tax benefit of up to €63,000. With regard to the rent that the owner can charge, this varies depending on a number of factors, such as the location and size of the dwelling, but in any case is below the equivalent average market rent. The rent is revised on an annual basis, based on changes in core inflation.
From the tenant’s perspective, they benefit from a stable rent, which is better adapted to their means than the private rental market. Eligibility for the scheme is based primarily on the income of the applicant household. This can vary quite a lot, depending on the location of the dwelling and the number and age of the members of the household. A single person living in a high-priced rental area could have an income of a little over €38,000, for instance.
|Country of Implementation||France|
|Regulatory Framework Reference||https://www.service-public.fr/particuliers/vosdroits/F35011|
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